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McDonald’s & Starbucks in Vietnam?

Everyone is talking about emerging markets these days and with all this talk we hear China come up a lot. However, David Rubenstein, a founding managing director of The Carlyle Group has made a good point. “If China, by the year 2035, is the biggest economy in the world, how much longer can you call it an emerging market?”

So, what is a true emerging market? CNN’s Andrew Stevens has recently reported on the growing economic might of Vietnam, particularly Ho Chi Minh. The city is booming and has been booming at an average annual growth rate of 7 percent for the past 10 years. More importantly, Vietnam is serious about drawing in foreign business.

We’ve seen electronics manufacturers like Samsung and Canon, big Asian carmakers as well as Ford, and tanning factories that produce shoes for Timberland all move into Vietnam. Why? It’s cheaper. There’s less state intervention when companies follow workplace and environmental standards. Plus, Vietnam has key access to a vast and cheap labor pool across the borders of Cambodia and Laos, according to Stevens.

But what about retail, particularly retail food? Here are some quick facts about retail food and market potential in Ho Chi Minh compared to its Chinese sister city, Shanghai.

What would the demographic makeup of the first McDonald’s in Ho Chi Minh look like?

McDonald’s trade area with an 1100m large radius would include a labor population of 75,544, a female population of 6,228, a male population of 59,125, and a total population of 124,703. To learn about Trade Zones, watch the quick video.

And Starbucks?

Starbucks trade area with a 900m large radius would include a labor population of 74,283, a female population of 5,985, a male population of 56,460, and a total population of 116,320.

And lucky for us, the trade areas of these two retail giants’ first locations in Vietnam overlap.

So what does a trade area analysis reveal?

Discussion Questions
  • Will we see an emergence of foreign brands such as McDonald’s and Starbucks in Vietnam like we have in China? Why or why not?
  • Where in Vietnam would you open the first McDonald’s?
  • Where in Vietnam would you open the first Starbucks?

 By Edward Eng 
 Business Development Manager

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